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Semiparametric estimation of lifetime equivalence scales

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Author Info
Krishna Pendakur (Department of Economics, Simon Fraser University, Canada)

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Abstract

Pashardes (1991) and Banks et al. (1994) use parametric methods to estimate lifetime equivalence scales. Their approaches put parametric restrictions on the differences in within-period expenditure needs across household types, the intertemporal allocation of expenditure, and the shapes of commodity demand equations. This paper puts parametric structure only on the differences in within-period expenditure needs across household types. This implies structure on the intertemporal allocation of expenditure, but leaves the shapes of commodity demand equations unrestricted. Semiparametric methods are used to estimate within-period and lifetime equivalence scales with Canadian expenditure data, and to test the restrictions imposed on within-period expenditure functions. Estimated lifetime equivalence scales are similar in size to those estimated by Banks et al. (1994) and exhibit equal lifetime costs for first and second children. Copyright © 2005 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.768
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File URL: http://qed.econ.queensu.ca:80/jae/2005-v20.4/
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 20 (2005)
Issue (Month): 4 ()
Pages: 487-507
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Handle: RePEc:jae:japmet:v:20:y:2005:i:4:p:487-507

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References listed on IDEAS
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  1. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-43, May. [Downloadable!] (restricted)
  2. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June. [Downloadable!] (restricted)
  3. Keen, Michael, 1990. "Welfare analysis and intertemporal substitution," Journal of Public Economics, Elsevier, vol. 42(1), pages 47-66, June. [Downloadable!] (restricted)
  4. Pollak, Robert A & Wales, Terence J, 1978. "Estimation of Complete Demand Systems from Household Budget Data: The Linear and Quadratic Expenditure Systems," American Economic Review, American Economic Association, vol. 68(3), pages 348-59, June.
  5. Pendakur, Krishna, 1998. "Semiparametric estimates and tests of base-independent equivalence scales," Journal of Econometrics, Elsevier, vol. 88(1), pages 1-40, November. [Downloadable!] (restricted)
  6. Gozalo, Pedro L., 1997. "Nonparametric bootstrap analysis with applications to demographic effects in demand functions," Journal of Econometrics, Elsevier, vol. 81(2), pages 357-393, December. [Downloadable!] (restricted)
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  1. Ralf A. Wilke, 2006. "Semi-parametric estimation of consumption-based equivalence scales: the case of Germany," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 781-802. [Downloadable!]
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